Overcoming the challenges to youth opportunity

Karen Kornbluh
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10 April 2013

High levels of youth unemployment in most European countries and in the US have been an increasing source of the distrust of political parties and governments. On the one hand, the economic crisis has made entry into job markets more difficult for young people, and there is no prospect of a quick fix. On the other hand, the more structural shift towards increasingly competitive and permanently changing socio-economic environments demands more from both individuals and public institutions as young people begin their careers. Against this background, too many young people currently drop out of school and lack direction. For young workers, and especially for the disadvantaged, failure to find a first job can have negative long-term consequences.

Although the most promising way of providing opportunity is through boosting growth and employment – fostering more and better jobs, enabling people to escape poverty and offering real career prospects – specific measures focused on young people are essential so that they do not fall through a growing gap between mismatched institutions and the changing requirements of the global economy.

A specific effort focused on youth opportunity is critical for progressives who in the austerity-stimulus drama are often miscast in the role of indiscriminate defenders of government spending opposite conservatives who mask social service and pro-business tax cuts as growth-oriented “reform.” When equality of opportunity seems a fading memory for many, and the government seems unable to help, what social democrats and progressives have to say to today’s young people is key to ensuring a more sustainable and equitable growth model. Offering young people the opportunity to gain the skills they need for the new jobs of the new century is also key if progressives are going to stake claim to an optimistic, future-oriented economic agenda.

The challenges to youth opportunity
However, while equipping young people with the skills they need for the twenty-first century work environment is essential for progressives in their effort to develop a more sustainable and equitable growth model, many challenges lie ahead. Four can be identified: Firstly, social mobility, which is limited in many OECD countries, with worrying levels of inequality transmission.

Source: OECD Going for Growth 20101

Secondly, the rise in higher education fees and the persistence of two-tier labour markets which represent sizeable hurdles to successful career starts. Our youth compete in a global economy and yet they often lack access to the skills they need to succeed.

Source: OECD (2011), Education at a Glance

Thirdly, young people aged 15/16-29 who are neither in employment, nor in education or training (NEET), and who lack a high-school education, frequently go back and forth between temporary jobs, unemployment and/ or inactivity, even during periods of strong economic growth. Before the crisis hit, 1 in 10 young people across the OECD who had left education fell into this category. In the US, roughly 4 million young adults aged 16-24 are currently disconnected from both employment and the education system. These youths usually cumulate serial social risk factors (low education, ethnic minority background, living in a deprived neighbourhood, drug use, mental illness), and young women are more likely to be disconnected than men.

Finally, labour market segmentation is increasing between workers in regular jobs - with higher wages, benefits, protections, and job security - and workers in temporary and part-time jobs. All too often, young people can only get contingent jobs which consign them to the temp economy.

The need and opportunity for reform

In staking a claim to an optimistic, future-oriented economic agenda, the need for progressives to update their economic policies and social institutions for a digital, globalized economy is clear. There are a number of opportunities for progressives in addressing these issues:

Closing the attainment and aspiration gap
In the global economy, young people must be educated and prepared for rapid technological change and competition from workers around the world. This economy demands that all students attain at least a high-school diploma; that they be educated to global standards of excellence. It increasingly requires that they attain some higher-education or substantial on-the-job training; employers are more reluctant to hire those with just a high-school diploma especially when there is doubt about what skills have been acquired. Progressives should make investment in education with the goal of achieving a world-class education for all a key pillar of their economic agendas. This must start with early childhood and include post-secondary training.

Governments must close the ‘attainment and aspiration gap’ at school by bringing down the number of early dropouts and ensuring fair access to higher and further education.

Today, students are leaving high school too soon. In the US, although there has been recent improvement, roughly 25% of students fail to graduate even from high-school.

Progressives must make investment in education a pillar of their economic agendas; and they must be champions of both excellence and equity. OECD’s PISA results suggest that the school systems that do the best also invest heavily in high need schools. The most effective polices to achieve both equity and excellence and reduce dropout rates are to: invest in early childhood education and care; attract, support, and retrain high quality teachers in highneed schools; set high standards and give students the sense that they will go on to post-secondary schooling from early ages; provide a mix of vocational and academic training.

It is also essential that K-16 schools (a movement in the United States which seeks to promote public and educational policies designed to strengthen linkages between schools and higher education) engage all students in ways that keep them in school. Students can be taught traditional subject matter through teaching them practical skills so they see their relevance – to engineering, accounting and finance and computer programming.

Governments must combine these efforts with opportunities to acquire appropriate skills and work-study experience (as they have in the UK and the Netherlands). A key element must be effectively designed apprenticeship schemes which, according to an OECD study, “can promote the transition from school to work when many employers are still wary about the future and uncertain about hiring new workers.”

At the same time, governments must develop innovative ways to attain equal access to tertiary education. Governments are experimenting with various ways to control rising costs. The rise of online learning offers a tremendous opportunity. While not a panacea, online education combined with one-on-one interactions can theoretically provide access to an education tailored to needed skills and readiness – and can offer certification of skills attained. Any parent who has witnessed a child learn how to play a complex video game in under an hour has felt the frustration that there is not a similar technique yet available to teach useful job skills. Governments must work with educators and businesses to discover the best uses of electronic tools; they must monitor and evaluate these efforts so as to build a body of knowledge; and they must play an active role in ensuring broadband is made accessible so that this educational goldmine is available to all.

Finally, governments should use their convening power to help develop tools to solve the market failure of lack of information - among businesses, youth, and job training programmes - about what skills youth need to acquire and whether they in fact have those skills. Electronic tools should help youth and those who wish to help them to assess what skills business needs, and to assess their competencies, validating them through certificates.

Source: OECD (2012), Off to a Good Start?, Jobs for Youth

Tackling the NEET problem
Specific measures are needed to tackle the barriers facing disadvantaged youths who are neither in employment, education or training. According to the OECD report “Off to A Good Start: Jobs for Youth” training programmes combined with work experience and mentors have been tested and found effective, though expensive. It is up to progressives to get the word out and steer funding to these programmes such as second-chance schools in Europe and the US Job Corps programme. Programmes offering financial assistance should include outreach programmes, early intervention, workshops in résumé writing and how to contact an employer, and allow for mobility. Youths should work, train, or actively search while receiving assistance.

Progressives must be to the fore in recognising the valuable role government can play as a convener, catalyst and coordinator of supports and incentives from a variety of stakeholders, including local governments, employers, trade unions, NGOs, and the youth and their families. In the US, the White House Council for Community Solutions champions, “A new kind of community collaborative - an approach that aspires to significant, communitywide progress by enlisting all sectors to work together toward a common goal.” In Nashville, Tennessee, for example, Alignment Nashville pooled the thinking and advice of more than 100 nonprofit leaders and community members to develop a shared approach to addressing school dropouts.

Navigating the problem of labour market “insiders” and “outsiders”
Attention must be paid to the two-tier workplace – creating an on-ramp but ensuring that it does not become a slow-lane of no-benefit, low wage, temp careers - without alienating traditional centre-left voters. Governments should invest in funds that promote new skills for high-wage new jobs, targeting young entrants. It is essential to find ways to construct apprenticeships and internships especially in these sectors so that they do not undermine labour protections but do provide an opportunity for new entrants.

Governments must promote growth of innovative new, high-wage industries through funding for R&D, fostering broadband deployment and creating a favourable environment for entrepreneurship. In many countries, including the US, stimulus packages included funding for green jobs and broadband deployment.

Progressives will need an answer to youth in countries with large differences in wages, protections, and benefits offered for the precarious jobs available to them compared with other jobs. Governments can improve nonstandard jobs by subsidising benefits and even wages; in the US, the passage of universal healthcare means that young people can stay on their parents’ healthcare plans until 26 and can gain access to subsidised healthcare even if they are not provided health insurance by their employers; the Earned Income Tax Credit provides relief to low-income workers. They can also provide ongoing training to ensure that workers can add to their human capital and switch lanes.

The next generation

Governments must address this most critical cluster of problems effectively in an era of constrained resources – and begin to restore trust in its ability to address new problems of the 21st century economy.

Progressives must be at the forefront of real reform – by working with other stakeholders and by monitoring and evaluating programmes for their effectiveness, and steering support to those programmes that actually produce results for youth. Government has an important role in gathering data to understand what works and shifting support to those programmes. In the US, the Office of Management and Budget has placed increasing emphasis on monitoring and evaluating programmes for effectiveness, and a new group, America Achieves/Results for America is building momentum for such efforts. Legislation has been introduced in the budget context to ensure that public funds are directed toward programmes using data and evidence to ensure greater effectiveness.

At a time when social services are critical, spending must not be wasted and must be focused on programmes that produce the greatest outcomes, and on ensuring equal access to opportunities. As governments confront a future of constrained resources, they must avoid both hurting the most vulnerable and “eating their seed corn” (consuming the resources they need for the future). Instead they must engage in real reforms so that they can both maintain needed social services and make funds available for investments to grow the economy and equip the next generation with the tools they need to succeed.

Karen Kornbluh is a former US Ambassador to the Organisation for Economic
Co-operation and Development (OECD)

1. The height of each bar measures the extent to which sons’ earnings levels reflect those of their fathers. The estimates are the best point estimate of the intergenerational earnings elasticity resulting from an extensive meta-analysis carried out by Corak (2006) and supplemented with additional countries from d’Addio (2007). The choice of empirical estimates in this meta-analysis is motivated by the fact that they are based on studies that are similar in their estimation technique, sample and variable definitions. The higher the value, the greater is the persistence of earnings across generations, thus the lower is the intergenerational earnings mobility.

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